The U.S. Bureau of Labor Statistics data shows that the economy added 372,000 jobs in June, and the unemployment rate remained at 3.6% for the fourth straight month. While this data should ease recession fears, it could be a strong reason for the Fed to keep raising rates aggressively. Therefore, the stock market may continue to witness a downtrend.
Large-cap stocks usually perform steadily amid such uncertainties because of the broad market reach, strong pricing power, and ample liquidity of the underlying companies to survive any short-term headwinds. Investors’ interest in large-cap stocks is evident from the SPDR S&P 500 Trust ETF’s (SPY) 2% returns over the past week.
Large-cap stocks Bristol-Myers Squibb Company (BMY), Bayer AG (BAYRY), and Mitsubishi Heavy Industries, Ltd. (MHVYF) have remained resilient to the market shocks so far this year and possess enough fundamental strength to keep outperforming the market. Therefore, these stocks could be solid investments now. Our proprietary POWR Ratings system has rated these stocks Strong Buy.
Bristol-Myers Squibb Company (BMY)
With a market capitalization of $161.43 billion, BMY develops, licenses, manufactures, and markets biopharmaceutical products worldwide. It offers hematology, oncology, cardiovascular, and therapeutic immunology classes and sells products to wholesalers, distributors, pharmacies, retailers, hospitals, clinics, and government agencies.
On June 24, 2022, BMY’s Breyanzi, a CD19-directed CAR T cell therapy, was approved by the FDA for treating adult patients with large B-cell lymphoma (LBCL).
In the pivotal Phase 3 TRANSFORM trial, a single infusion of Breyanzi significantly outperformed the nearly 30-year standard of care with a median event-free survival of 10.1 months vs. 2.3 months. This should help BMY’s Breyanzi gain a wide market reach in the coming months.
For its fiscal 2022 first quarter ended March 31, 2022, BMY’s total revenues increased 5.2% year-over-year to $11.65 billion. The company’s non-GAAP gross profit came in at $9.23 billion, indicating a 6.7% rise from the prior-year period. Its non-GAAP EBIT came in at $5.05 billion, representing a 5.8% rise from the prior-year period.
BMY’s non-GAAP net earnings came in at $4.25 billion for the quarter, up 7.1% from the year-ago period. Its non-GAAP EPS rose 12.6% year-over-year to $1.96. As of March 31, 2022, the company had $12.37 billion in cash and cash equivalents.
The consensus EPS estimate of $7.55 for fiscal 2022 ending December 31, 2022, indicates a 0.5% year-over-year improvement. It surpassed Street EPS estimates in each of the trailing four quarters, which is impressive. Its EPS is expected to grow at 4.5% per annum over the next five years.
The stock’s 9.39x forward EV/EBITDA is 29.7% lower than the 13.36x industry average. In terms of forward Price/Cash Flow, BMY is trading at 10.01x, 39.6% lower than the 16.56x industry average. The stock has gained 20.5% year-to-date to close the last trading session at $75.14.
BMY’s POWR Ratings reflect this promising outlook. The stock has an overall A grade, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has an A grade for Value and a B grade for Growth and Quality. Click here to see the additional ratings for BMY’s Momentum, Sentiment, and Stability.
BMY is ranked #3 of 170 stocks in the Medical - Pharmaceuticals industry.
Bayer AG (BAYRY)
German life science company BAYRY operates through Pharmaceuticals; Consumer Health; and Crop Science divisions worldwide. It distributes its products through wholesalers, pharmacies and pharmacy chains, supermarkets, online and other retailers, hospitals, and directly to farmers. It has a $57.88 billion market capitalization.
On June 28, 2022, the American Diabetes Association (ADA) Standards of Medical Care in Diabetes – 2022 awarded a new grade A recommendation to BAYRY’s KERENDIA for improving cardiovascular outcomes and reducing the risk of chronic kidney disease (CKD) progression in patients with CKD associated with type 2 diabetes (T2D).
Later, on June 30, the Chinese National Medical Products Administration (NMPA) granted marketing authorization for Kerendia. This will help KERENDIA to witness growing demand and gain wide recognition across the industry.
For its fiscal 2022 first quarter ended March 31, 2022, BAYRY’s net sales grew 18.8% year-over-year to €14.64 billion ($14.91 billion). The company’s gross profit came in at €9.46 billion ($9.64 billion), indicating a 24% rise from the year-ago period. Its EBIT came in at €4.21 billion ($4.29 billion) for the quarter, representing a 36.6% rise from the prior-year period.
BAYRY’s net income came in at €3.29 billion ($3.35 billion), up 57.6% from the prior-year period. Its EPS increased 57.3% year-over-year to €3.35. As of March 31, 2022, the company had €5.79 billion ($5.89 billion) in cash and cash equivalents.
The consensus EPS estimate of $1.94 for fiscal 2022 ending December 31, 2022, represents a 1% rise from the prior-year period. It surpassed Street EPS estimates in each of the trailing four quarters, which is impressive. The company’s EPS is expected to grow at a 4.7% rate per annum over the next five years.
The stock’s 6.80x forward EV/EBITDA is 49.1% lower than the 13.36x industry average. In terms of forward Price/Cash Flow, BAYRY is currently trading at 9.20x, 44.5% lower than the 16.56x industry average. The stock has gained 8.3% year-to-date to close the last trading session at $14.37.
BAYRY’s POWR Ratings reflect its solid prospects. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.
It has an A grade for Value and Growth and a B grade for Stability. In addition to the POWR Ratings grades we have just highlighted, one can see BAYRY’s Momentum, Sentiment, and Quality ratings here.
BAYRY is ranked #14 in the Medical - Pharmaceuticals industry.
Mitsubishi Heavy Industries, Ltd. (MHVYF)
With a $12.26 billion market cap, Tokyo, Japan-based MHVYF manufactures and sells heavy machinery through Power Systems; Industry & Infrastructure; and Aircraft, Defense & Space segments worldwide. It manufactures machinery, ships, turbines and engines, prime movers, aircraft, and machine parts for military and commercial use. It also researches and develops nuclear power plants.
On July 5, 2022, MHVYF’s power solutions brand Mitsubishi Power received a series of contracts from Taiwan’s state-owned Taiwan Power Company (TPC) for a large-scale renovation project of power generation equipment at the Datan Power Plant in the city of Taoyuan to reduce nitrogen oxide (NOx) emissions.
The project aims to replace current combustors with air-cooled, premix combustors, which lowers the local combustion temperature and curbs NOx generation while maintaining generating capacity and enhancing operating flexibility by improving operations and maintenance (O&M). This will enable the brand to nurture its relationship with the entire Taiwan power industry.
For its fiscal 2022 full year ended March 31, 2022, MHVYF’s revenue increased 4.3% year-over-year to ¥3.86 billion ($28.36 billion). The company’s gross profit came in at ¥655.91 billion ($4.82 billion), up 19.3% from the prior-year period. Its EBIT came in at ¥99.19 billion ($728.55 million) for the quarter, representing a rise of 90.4% from the year-ago period.
MHVYF’s net income came in at ¥113.54 billion ($834 million), indicating a 179.4% rise from the prior-year period. Its EPS (basic) increased 179.7% year-over-year to ¥338.24. The company had cash and investments of ¥314.26 billion ($2.31 billion) as of March 31, 2022.
Analysts expect the company’s revenue to improve 197.2% year-over-year to $28.54 billion for fiscal 2023 ending March 31, 2023. The stock’s 7x forward EV/EBITDA is 27.9% lower than the 9.71x industry average. In terms of forward Price/Sales, MHVYF is trading at 0.41x, which is 65.2% lower than the 1.18x industry average. The stock has gained 51.6% year-to-date to close the last trading session at $34.55.
MHVYF’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.
It has an A grade for Value and a B for Growth and Stability. Click here to see the additional ratings for MHVYF’s Momentum, Quality, and Sentiment.
MHVYF is ranked #6 of 79 stocks in the B-rated Industrial - Machinery industry.
BMY shares were trading at $75.67 per share on Friday afternoon, up $0.53 (+0.71%). Year-to-date, BMY has gained 24.19%, versus a -17.40% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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